Trying to Clean up My Credit

PAY IT OFF! You don't need a good credit score unless you plan on borrowing money (which is NEVER a good idea)!! A good credit score is nothing more than an indication that you owe money...not a thing to be proud of! Check out www.daveramsey.com...it helped us get out of debt COMPLETELY! It's great! Good Luck!

Don't worry about it lowering your score. Having no debt and not wasting money on interest is always better. Over time, your credit score will improve. Credit's one of those things, it's so much easier to make it lower but so much harder (w/more time) to make it high.

At least you have the CC available to you in case of an emergency, that's what is important.

As time goes by, it'll go up because the credit score is also based on your debt ratio as well.

Good job on getting them paid off, that's not easy to do.

Make sure your don't close the accounts once you have them paid off...this will lower your income to credit ratio. You want to have some credit left just not more a 1/3 of your income. So say you have a credit card with a $1000 limit you don't want more than a $300 balance...but make sure your credit is still available when you pay it off.

pay it off...paying off your debt is the best way. The score could have been lowered by something else that happened coincendently at the same time of the pay off and not really be related.

Once the debt is paid off you can start building good credit, but it will take time, it's hard and frustrating, but in time it will happen.

I'm proud of you for doing the right thing and taking care of your debt. It's tough, but you'll feel very proud of yourself when it's accomplished and you are debt free.

Hi J.,
I think you should pay off your card. I'm not sure why the your credit scores are lowering when you do that. It may be because the card is canceled immediately after but in the long run it is better. The dip in your score will be temporary because it sounds like you're on the right track with paying off your debts and getting everything in order. Just focus on paying all your bills on time and soon your score will rebound. If you don't pay it off, you'll have to wait years before your score rebounds. Do you watch the Suze Orman on CSNBC or read her books or online articles? She's great and I've learned all the basics from her. But kudos to you for taking care of your business!! Hope this helps!

Pay off the card-all cards. On a month basis use your card for expenses and then pay it off completely! Do this every month, be on time and your score will improve.

I believe that paying off this credit card should improve your FICO score because you will no longer be showing an unpaid overdue collection on your credit score. Just make sure that the company reports that the overdue amount has been paid in full to all 3 credit bureaus.

I worked in the credit reporting business for 15 years. When you paid those collections off they then reported it paid to the bureaus. Which is good but it's also new "collection activity" on your report. After a few months a paid collection is much better on your report than an unpaid collection. And now you know that the 7 year clock has started ticking. It will come off of your report 7 years from the paid date. Go ahead and pay off the last one. The new collection activity will only negatively impact your report for a few months. Then you want to have 3-5 active, reporting accounts in good standing with some activity at least every few months. You can pay your balance off every month as long as you use the credit line regularly. The best type of credit to raise your score is a mortgage or auto loan (non-revolving credit).

I have heard you can hire a credit cleaner (a lawyer) who for about $70-$80 a month goes in and disputes all that and gets your credit score back up

Did you contact Equifax etc to see why your score was lowered. That makes no sense! Good luck

Make sure you don't close any of these accounts. When you close accounts that actually lowers your score!

Pay it off and get rid of it. If your score lowers again. don't worry. It will start to raise up again. Just try not to use more than one credit card and throw all the others away. Pay off the credit card you use with your next paycheck. It will keep you current and you won't have the problem with credit. Use it only once a month and you will see a difference in you credit rating.

Pay off your debt. It's the healthiest way to live. yes your score will go down initially but it will go up over time and it will be better to have a lower debt to income ratio when purchasing anything. Good job with getting things paid off. Save and pay cash for things when possible.
Good job with getting this far!

Did you close the accounts when you paid them off? Closing them will lower your score. You need to keep the accounts open to show how long you've had credit. Also, having small balances on a few cards is better than having a huge balance on one. My husband and I made this mistake when we consolidated our cards. Don't do this.

Been there done that and it sucked. Here's the thing, bad credit is better than no credit to a lender. I would go ahead and pay it off but keep something around. You can call your credit card company and ask them to lower your limit and to not automatically extend it if you're approaching it. You want to keep some credit other than loans. You need to be able to show you can make payments on a regular basis and are careful with your spending. Lenders look at the whole picture not just the stuff you're delinquent on. Good luck and congrats on being almost debt free.

I don't know that paying a COLLECTION lowers your score---I know that paying off your c/c in full can, but a collection? In any case, they also look at your entire report and a paid collection looks better than an unpaid one!!

Hi J.,

I used to work alot with a credit reporting company, and paying off a negative item SHOULD NOT lower your score. It might not raise it right away, but it should not lower it. A couple of suggestions:

1) Pay off the debt. The sooner you do, the sooner it will be off your credit history.

2) Call the company with whom you have the collection item - explain to them that you would like to pay the item in full, and see if they will work with you to get it off your report. Some companies will do this if they get payment in full. Even if they aren't willing to take it off, get a letter from them stating it has been paid and the date it was paid. They sometimes take a long time to report it to the credit bureaus, and having a letter in your possession will only make life easier for you should you want to obtain new credit.

3) Make sure you get the name of the person you spoke to (first and last) and the date, time and department if applicable. Also, make sure to ask them if they have a direct # or extension, so that you can call them back directly if necessary instead of talking to someone new.

4) Sometimes, the person you talk to isn't always willing or able to help, so don't be afraid to ask for a manager or supervisor.

5) Keep a copy of EVERYTHING!! Your payment, documentation, etc.

Also, to help your credit score go up, close any cards that you don't use. Open credit cards or credit lines, even without balances, tend to keep a score lower. And if you have to use a credit card, try to pay it off in full at the end of the month (so hard I know...but this does show credit responsibility and does raise your score, even if you only charge $50/month).

I hope this helps, and good luck!

I am with Mandi on this, having worked in the credit industry previously, and currently married to my husband who sells the service to mortgage companies and banks. DO NOT PAY THIS OFF (if it's been 3 years or more) because doing so WILL update your credit report showing that it's a current collection, rather than one from several years ago. So, it WILL lower your score, and then you have to wait another 7 years for that to come off of your record! MANY people don't know the ins and outs of credit, as is proven with several of the responses, nor do they know what will actually harm your score, so do what you're comfortable with, but be informed when you do so. If you're not in a rush to improve your score, and just want this monkey off your back, then by all means.. pay it off. But if you're looking to buy a house or car or something big, than do as Mandi and I are suggesting.

Good luck,
M.

It's good to have a couple open revolving cards on your credit. The balance on the card should stay to less than 25% of the credit line. If you pay the credit card off each month, that's the best route, because it's showing you're responsible, but then you also don't have to pay interest! I hope everything turns out well!

I wanted to second what Michelle wrote. By this time, they don't expect to be paid off, so if you call the collection agency and offer to pay in full, or even slightly less in return for a letter saying it has been removed from your credit, they will probably oblige. My husband had two hospital collection accounts that were killing his credit. ]He bargained with the collection agencies. They were both erased and his credit went from low 600s to 800.
It's worth a shot. He used to work in collections and did it often for others.

Your credit score will come back up, don't worry, It's just going to take some time. I wouldn't waste money on "credit counselors" or "Credit lawyers" because there are too many frauds out there. You're doing the right thing by taking care of your credit now. Ignore and it will come back to haunt you, but pay it off, deal with a slightly lower score for a short while, then you'll be debt free with a stronger and stronger credit file.
Good luck!

Hi J.:
While its commendable,that you have the desire to clean up your credit, those debts,that have been in collections for a couple years, have already been written off,or sold to a collection company. In other words,the company you were in debt to has given up attempting to collect,and has written it off as a loss.Alot of times, they will sell off these old debts to companies, who are in the business of (collecting) and those are usually the ones that harass and call you constantly. They are out to make a buck,and will try to frustrate you to the point you'll pay them,what you owed the original company. If I were you,I'd save that money you intended to pay that final debt with.You will have to go through alot, to get the debt off your record. Those people,at the collection company don't care about clearing your credit,they're simply in it for the money.It could take years of writting trw,or seeking legal advice before its off. I wish you the best J..

Pay it off! Your peace of mind is worth more than your credit score. Anyway, I thought it only lowered if you closed the account, not paid it off?

If the collection is older sometimes paying those off can lower your score. Reason is because the account is older the score reflects more of your recent credit. By paying off the account it moves that account from an older collection, to a current paid off collection. Seems strange, but I have seen where credit scores better with old collections, then if the old collections are paid. Problem is that if you are looking for other types of credit, mortgages, student loans etc most lenders will require that collection account be paid. I believe that collections will stay on your report for 7-10 years (from the original time of delinquency) so if you aren't looking to do anything major within that time frame you will probably have a better score not paying it off. If you do pay it off your score may go lower, but it shouldn't stay low for long if you are paying your accounts on time and using credit wisely now. Let me know if you have any other questions. ____@____.com luck

Hi J.,

I am a Loan Officer and I have learned that when it comes to paying off credit card debt you should never pay off the entire card. For some silly reason it always will lower your score. It is always better to leave about $100 on the card. Credit companies want to see that you are using your cards and paying them down, ridiculous I know but that is just the way it is. In order to raise your score again you should put about $50 back on the other cards and you will see it go up. Good luck.

I've been told that keeping 3 open accounts with good paying, and good credit limits will help your credit score... paying off everything is not good... as dumb as that sounds...

So i would suggest, pay them up until you have a managable balance and keep that up... but also charge something every so often, monthly or so and that should help your credit score...

J.,
I have been through a lot with bad credit and I will give you good advice I was given. Pay off that last credit card. THEN, you will need to find a company or bank that will give you a card regardless of your low score. This is most likely going to be a secured credit card or a card with a high interest rate. I recommend secured through your local bank to start. (If that is not possible, try Household Bank, N.A. I used them for my first secured credit.) Use this card for a set amount of montly purchases, being sure to PAY OFF the balance in full each month. Never be late. Be a model credit card citizen! Through time and diligent responsibility, you will raise your score and eventually be able to move on to better cards and even to purchasing larger items (car, etc.) through credit. I know it is frustrating, but time and good money management are the only things that can help this situation. (trust me, I was the worst and now I have great credit!)
Good Luck!
T.

Hi J.

My name is M. and I own a company that helps with this my question to you would be how long has it been on your credit and is it in collections. if it has been in collections for more than 3 years leave it it will lower you score becuse it will renew that fact that you owe moneys. on your score also dont settle that will also lower your score sometimes. If none of those two apply you will be fine and it will help your score sometimes up to 20points! hope this info will help you in making your decission

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www.mommysavers.com

They are lots of other Moms in your situation there that can give you awesome advice.

Pay it off. Don't worry about the credit score, you can build that up again slowly. Start keeping that interest for yourself. Build up a small savings account. What's the worst thing that could happen to you if you pay off the bill? Peace of mind, a sense of accomplishment, pride in getting out of a bad situation, one stresser removed from your life? I'm not seeing the downside of this.
Congratulations on a job well done!

You should definitely pay off your debt. Keep the account open if possible. Closing accounts will lower your credit score. Continue to use your credit card and pay the balance off each month. That will show you are a responsible user. Your credit score will start rising again. I was told never to use more than 30% of the available credit line especially if you can't pay the balance in full by the end of the month.

M.

we go through the same thing about once a year! We pay off our debt in full and our credit score lowers but usually a month or two later (if you don't close the account) if rises really high because you have a large line of credit that hasn't been used.

Hello J., if it has been in collections for a while, there isn't much you can do to help your credit score, because it has been written off as a bad debt, but it is best to pay it. (I used to do collections, and know the repurcussions of not doing so) In the future, the best thing to do is to pay off a credit card, but use it about once a month, but pay off what you spend. For instance, instead of paying cash for groceries, or by check or ATM card, use your credit card, but take the cash you were going to spend on those groceries and send it in immediately to the credit card company. This tells creditors that you have credit and are using it wisely. It shows an active account, with a good payment history. I learned this in a debt class I took many years ago. Hope this helps!!

yes J., i do have some advice. we (our business) has a system that helps you raise your score, gets items off your credit report that do not belong to you, and, monitor it for you on a daily basis. even though an just an inquiry of any kind or an application for a credit card or loan makes a mark on your report, our system can monitor and make adjustments without you getting a negative mark. if you are interested in not only raising your score but also having it monitored (especially with identity theft increasing like crazy), then please write to me again. we also do something that no one in the country is doing, and that is, if your credity has been compromised, we actually do the restoration process for you. aloha--D.

pAY OFF YOUR CREDIT CRADS.
THEN , KEEP ACCTS OPEN AND USE THE Cards AND PAY IT OFF MONTHLY ! IT WILL INCREASE YOUR FICA SCORE.
SUZZANNE ORZMAN ! BUY THE BOOK -

Usually, if it is old, they do not expect to get it paid back. This will give you bargaining power. Tell them you will pay it off in full if they fax you a letter stating that it will be reported as a mistake on their part, in return for paying it off. They will ask you to pay it that day, but tell them you want the letter first.

Hello, glad to hear you've been working on your credit for the past few months. After a few years it definately takes time. Since you stated "this is the last bad item" but you do have the $ to pay it off in full.....I would pay it off in full that way it won't be looming over you for a few more months or even a year or so. I know you're worried about lowering your credit score again BUT you've done good in paying off your other debt. Don't worry your credit score will eventually go up again. Yes it takes time but now that you've paid off your collections you can start fresh.